Reference no: EM132472110
BAAC 2202 - Corporate accounting - Al Musanna College of Technology
Problem 1:
Mr. Ali and Mr. Salim decided to start a partnership business. With the help of a consultant, they have drafted a partnership deed. Some of the terms and conditions of the partnership deed are given below:
- Mr. Ali and Mr. Salim should bring OMR 60,000 and OMR 30,000 respectively as their capital
- Profit sharing ratio will be on the basis of the ratio of their capital balance at the end of each year
- Capital accounts should be maintained under fixed system
- Interest on capital and interest on drawing are to be provided @ 5% and 6% respectively
- Each partner is allowed to withdraw 10% of the net profit every year
- Mr. Ali is entitled to get a salary of OMR 600 per month
- Mr. Salim is entitled to get a commission of 5% on net profit before charging such commission.
The partners started their business on 01.01.2019
During the first year operation, the following transactions occurred:
OMR
- Purchase of goods - 60,000
- Sale of goods - 90,000
- Wages - 3,000
- Purchase of office furniture - 3,000
- Salary - 6,000
- Rent - 2,200
- Travelling expenses - 1,500
- Other expenses - 650
- Bank loan - 15,000
- Investment - 14,000
- Sundry debtors - 6,000
- Bills receivable - 8,650
The accountant of the firm charged 10 % depreciation on office furniture and valued closing stock at OMR 12,000.Interest on bank loan 8% per annum due but not paid
On 02.02.2020 the firm admitted a new partner Mr. Malik into the firm for 1/5 share on the following terms:
1. Mr Malik should bring OMR 25,000 as his capital and OMR 10,000 as his share of goodwill in cash
2. Assets and liabilities were revalued as follows:
- Furniture is revalued as OMR 2750.
- An unrecorded liability of OMR1,500 is recorded
- An unrecorded investment worth is taken into account OMR 2,500
Required:
Part 1. Profit and loss account for the year ending 31.12.2019
Part 2. Profit and loss appropriation account for the year ending 31.12.2019
Part 3. Balance sheet as on31.12.2019
Part 4. Balance sheet after admission of new partner
Attachment:- Corporate accounting.rar
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